Slashing migration would actually lead to higher house prices in Australia. Here’s why | Australian economy

Do you think the closure of our borders will correct the housing crisis? Think again.

According to KPMG’s economic modeling, the elimination of migration for the next decade will leave real estate prices 2.3% higher in the mid -2010s; And there are other negative economic consequences.

The increase in net migration is now decreasing, but it sees that the level of national sensitivity has increased towards the issue.

For example, A survey conducted by JWS Research Since November last year, 78% of the Australians claimed that housing access and purchasability were now a “national crisis ..

This is not very shocking.

Maybe the more surprising thing 67% of the participants accepted Australia should reduce migration intake to reduce the pressure in the housing market (70% supported the option to encourage people to move to regions).

These may be leading questions, but show how Australians are ready to blame immigrants for various problems – especially when it comes to emotional issues such as housing.

The right to politics wanted to take advantage of these concerns, especially considering the reluctance of the Albanian government to express a longer -term strategy for migration.

Brendan Rynne, the chief economist of KPMG, shares the consensus view that migration among economists is good for the Australian economy.

In an aging society with productivity problems, immigrants are often younger and better educated and bring new skills and ideas.

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As a thought experiment, Guardian Australia asked Rynne to model its negative deaths in the next decade, the effect of reducing population growth only on births.

In this scenario, the population will grow by about 0.4% per year by 1.3% envisaged by migration.

As a result of this change, instead of 31.2 million, it would be 29 million by 2035.

In this “no migration” scenario, 2.2 million people are less.

In a not surprising way, the economy, which has closed borders, is 2.4% smaller than the migration in ten years.

On the other hand, a smaller labor force means that employers need to compete more to attract workers.

This means that wages will be 7.5% higher after 10 years of migration and the unemployment rate will be 0.2 points lower than the basic situation.

Rynne said that withdrawal of population growth to natural increases for the next decade is not a major result for Australia ”.

“Isn’t it really evil? Isn’t it really? But at the end of the decade, the losses begin to expand, so that the longer you maintain the difficulty approach to population growth, the worse it will worse over time.”

In fact, Australian women will begin to shrink at the end of the population – lower than the replacement rate of 2.1, with an average of 1.6 children, and threaten the economic recession that disturbs countries such as Japan and Italy.

Then it has a budget effect.

Low population growth will seriously damage our payment capacity for the demands of Australians, especially as they age.

According to the Parliamentary Budget Office’s own budget creation vehicle, it is open to $ 87 billion, rather than approaching a balanced budget in the mid -2030s (such as current projection).

The total debt exceeds 2 TN by June 2035; 437 billion dollars more than a world where net migration continues, as expected.

And house prices?

As mentioned, modeling is 2.3% higher in ten years.

Because Rynne says that the demand for housing is lower and drowned with a decline in the number of workers available to build a house.

And higher wages also mean higher inflation that increases the benefits of more wages.

These are clearly stylized, but they draw a picture of how the segment of migration will flow to growth, housing, labor and budget.

Migration is not the treatment of diseases of our entire economy, but a well -managed program in the long run makes more economic good than damage.

Patrick Commins is the Economic Editor of Guardian Australia